New Ideas From Dead Economists: An Introduction to Modern Economic Thought

Book Review

A friend who teaches computer science once compared his teaching experiences
at a large university to a smaller, liberal arts college. After introducing
a new concept at the university, the most likely question from his technically
oriented students was, "Will this be in the final examination?" When
the same concept was introduced at the liberal arts college, the student
reaction tended toward, "Interesting, we were just discussing something
similar in history," or "That reminds me of yesterday's classics lecture."

Without a doubt, Todd Buchholz's New Ideas from Dead Economists will hold little appeal for the students on a straight line to their trade,
and the opposite for whose who are learning to integrate the great ideas,
like the students at the liberal arts college.

Of course, New Ideas from Dead Economists should interest
an audience beyond the campus. As an entertaining account of the world's
renowned economists' lives and ideas, it's the perfect book for a long
plane ride or a weekend at the lake. Having done that, you would have
responded to Lawrence Summers' imperative: "If you read one economics
book this year, read this one.

Buchholz hopes his witty and substantive history of economic thought
will compete successfully with Heilbroner's The Worldly Philosophers,
and by doing that, he will have created the basis for a many-editioned
annuity for himself.

Indeed, Buchholz has improved on the Heilbroner standard. New
Ideas from Dead Economists follows the format of introducing the
celebrated figures from the history of economic thought, telling briefly
about their lives and the social and intellectual environment in which
they found themselves, and then examining their ideas on the economy as
they evolved. That examination usually extends to contemporary issues
and reminds us that we've struggled with many of the same problems century
after century.

Clearly, New Ideas is more readable than The Worldly
Philosophers, due directly to the humorous examples that are liberally
scattered throughout the chapters. Even Gilligan's Island from "popular
culture" is used to demonstrate, uninsultingly, an otherwise complicated
economic idea. It's rare and a pleasure to chuckle through anything economic.

Yet another agreeable aspect of New Ideas is that Buchholz
sets the history of economic thought in the larger context of general
intellectual history. His appreciation for and knowledge of the humanities
is convincingly evident, and even though Buchholz claims the professions
of economist and lawyer, he still has an obvious, impressive command of
"high culture." In the chapter "The Stormy Mind of John Stuart" he weaves
the biographical sketch by referring to Isaac Newton, Jeremy Bentham,
Plato, Xenophon, Diogenes, Aristippus, Friedrich Nietzsche, Mozart, Puccini,
Wordsworth, Coleridge, Auguste Comte, Hobbes, Max Weber, Alexis de Tocqueville,
Beethoven, Michelangelo and Jimmy Durante.

Most every reader should find points of interest in the book. Naturally,
the parts about the Federal Reserve captured my attention. Only a few
pages into the introduction we learn that, "Most of our presidents have
shown little grasp of economic principles. John F. Kennedy once admitted
that the only way he could remember that the Federal Reserve Board controlled
monetary policy, not fiscal policy, was that Chairman William McChesney
Martin's name began with the letter 'M.' Apparently Kennedy couldn't have
appointed Volcker or Greenspan to the post."

Another portion of New Ideas deals with the Rational Expectation
school of thought. That chapter is germane to us at the Minneapolis Federal
Reserve because the now well-known intellectual earthquake had its primary
epicenter in our bank's Research Department. Rational Expectations is
appropriately placed as the last chapter in the time line before the general
summary.

In the chapter I favored on Adam
Smith, Buchholz poked fun at people who wear/wore Adam Smith neckties.
I could have been personally insulted, but knowing that it was intended
as tongue-in-cheek, I took no offense. In fact, Buchholz at one time sported
his own Adam Smith necktie. He abandoned it not because he no longer subscribed
to the ideas it symbolized, but for aesthetics. Too much polyester.

Speaking with economists about the book, I learned that the history
of economic thought is nearly extinct in the course of study for would-be
economists. They say it's because only limited time exists to master the
ever more complex tools of the trade. The sooner the students get to the
high level mastery of technique, the sooner they are marketable. Knowing
the history would be a nice touch, but just not that important. The focus
is exclusively on the current debate.

It seems a pity. And one wonders, after reading New Ideas,
if the intellectual giants who generated the great economic ideas didn't
have at least one thing in common: a command of their own history. Perhaps,
in addition to an active interest in the current debate, that's an essential
requirement to rise above all the other technicians.

At any rate, if Buchholz finds time to write another book and he wants
a more technical, non-historical appeal, then he need only change the
word order of his title. It could be Dead Ideas from New Economists.